America Won’t Bail
With the failure today of the bailout bill that party leaders cobbled together, not only has the stock market further collapsed, but the utter political strangeness of the situation has reached a pinnacle. This whole mess has a can’t-look-away quality to it. Pelosi blames Bush for the mess, Republicans blame Pelosi for poisoning the caucus, presidential candidates blame each other for the bill’s failure, and as never before in my memory the talk has very clearly nothing to do with reality.
Let’s examine motivations:
- Bush is a lame duck and wants to secure his legacy by not screwing this up.
- Either Obama or McCain will be President-elect in a month or so, and making the wrong decision on an issue this large could be deadly.
- Party leaders want to take credit for their party.
- Rank-and-file congressmen are shortly up for election and desperately want to not piss off their constituency.
And then the results:
- Bush puts forth an enormous proposal with no accountability or oversight, but is astoundingly willing to add the oversight back in to the bill when challenged.
- Obama and McCain both support the bill, but say almost nothing about it except that it should be passed quickly.
- Party leaders on both sides support the bill, seem infurated with rank-and-file congressmen when they fail to pass it, blame each other.
- Rank-and-file congressmen (R moreso than D, Bush be damned) hate the bill, due to significant outrage from their constituency, and kill it.
When you look at the pretty clear (and strong) motivations, the resulting actions make sense. But played as a right vs. left battle, it’s mass hysteria and confusion.
So what’s the outcome of all this? The American people seem to have come together, without regard to party, to kill this bill through pressure on our elected representatives, despite the wishes of the powerful of both parties. As a result, we’ve given ourselves one of the largest stock crashes in history and we’ve caused a large number of powerful people to soil themselves. I don’t know if I should be afraid or proud.
September 29th, 2008 at 11:48 pm
Nice dissection. Sure, go ahead and take some pride in Americans coming together to give their elected representatives some clear direction. The sheep are starting to snarl!
The reaction of the public reminds me more of a mob. It was a visceral “no-way are you borrowing our future tax dollars to buy a bunch of crappy investments on our behalf from a bunch of over-paid con artists” rather than an intellectual decision to go along with the fear mongers who warn that a bailout is needed now or the great depression will swallow us all. As usual, the truth lies somewhere in the middle. I favour and applaud the American people who have rejected this deal and hope the consequnces are not to negative.
Notice the media is continuing to blast home the message that if a bailout isn’t forthcoming soon we’ll all be at the soup kitchens.
Here’s an intersting take on it:http://www.opednews.com/articles/-The-US-Banking-Collapse-w-by-Amy-de-Miceli-080926-104.html
September 30th, 2008 at 12:01 am
This is near the middle, where the truth lies:www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html
September 30th, 2008 at 5:49 am
Good job Matt,
I think that is a fair assessment, skewed minimally. I think we all owe a lot of thanks to House Republicans on this deal as long as they can get something compromised in the next day or two, they removed a lot of nasty provisions in the original bill, to keep this discussion civil I won’t go into details now. We also owe many thanks to Democrats who are letting the Republicans block this, they have the votes but are letting things work out as they should. Also don’t underestimate the value Newt Gingrich has given to some sanity in this situation.
Should we be proud or scared? Both, we are seeing banks and financial institutions fail around the world, institutions that were leveraged 30 and 60 times in their debt equity ratios. That is not necessarily a bad thing, the markets are down but not as much as 1989 and we survived, if congress can get something done, if the House can get something done in the next day or two it wouldn’t surprise me if we see a 1000 point gain in one day. I think the Senate has been embarrassed enough that they will sign just about anything the House sends them and the President already has the cap off his pen.
As of yesterday this bill was 110 pages long, House Republicans have removed some of the crap, they must resist the temptation to put more back in.
September 30th, 2008 at 6:32 am
I tend to agree that this was a good thing. While I think something needs to be done to add a bit of elasticity to the markets, hopefully the bill we pass now will have a lot more restraint and clear thinking.
It’s an interesting effect we’re seeing. For years, people have come to trust government less and less; normally it doesn’t matter because in the end the only choice is what color of politician you want. But this is such a broad, immediate issue that it’s fun to watch people totally not care how much the powerful favor this bill, and push so vehemently against it with their representatives. They hear “this is about main street, not just wall street” and (true or not) are saying “yeah, right”.
Amusingly I think the one thing we could use more than anything — and we’re not getting from either the President or either candidate — is a true leader to stand up and explain the situation to the people, explain why $700B is needed, and explain how that money will help them. Even better if that leader were to have a better idea to put forth. The people have said “we’re not buying it”, so it’s time to start selling it.
September 30th, 2008 at 6:41 am
By the way, what do you make of Bush’s handling of this whole thing, shcb? The thing I didn’t mention in the original post was why he thinks his proposal (or apparently the modified bill) is such a good idea. He’s going against the people, his party, even his own prior rhetoric about bailouts.
September 30th, 2008 at 9:11 am
Economics isn’t the strong point of any of these three men so they have that working against them. McCain has the best “I told you so” out of any of them since he cosponsored SB190, Obama has the least blame since he wasn’t there when this all happened. Bush has been nonexistent in this situation. In many cases I think that is a good thing, but not in this case. Bush gave what, a 12 minute speech? Would it have killed him to make it 17 and explain how this bail out will help the American people as you said? He doesn’t have to understand it, he has advisors, he has speech writers, get the two together. There wasn’t a Q&A session after his speech. Bush is no dummy, get Jack Kemp in there and say “Jack, tell me what’s going on here in terms I can understand”. That is what managers do.
Since you’re from Texas you know how he governed before being president better than I, but it seems he has always prided himself on being a uniter, sometimes that is good, but sometimes leaders have to lead. One of my biggest criticisms of Bush is that his plan for working with congress has been to give his opponents 30% of what they want. He considers that a win. In this case his opponents just happen to be on both sides of the isle for their own reasons. That 30% included no oversight, even though he supported SB 190 that included oversight, eliminating golden parachutes etc. This current bill also included just a bunch of junk. A strong president would have pointed that out to the American people so we’ve increased the speech to 23 minutes a strong president also would have put his foot down to congress, even if he is a lame duck.
All that wind and I still haven’t answered your question. I think Bush has handled this badly and I think he is tired and ready for his tour of duty to be over, I’m not sure he bothered to know what was in the original bill, I think he just wanted it to go away. Sadly, I don’t think we’re going to get much leadership from the President, I might be wrong, maybe he’ll have one more burst of energy, but I wouldn’t count on it. Unfortunately the person showing the most leadership so far has been Newt, and he isn’t involved officially.
September 30th, 2008 at 11:11 am
I think you’re probably right all around there. Thanks for the reply.
I’m disappointed in both candidates (and particularly Obama, since I expect more from him) for not even trying to pick up the Presidential mantle and put forth something that makes sense to americans, and the parlay that popular support into congressional support. I’ve come to expect “the situation is bad; things must be done” kind of speeches from Bush, but what about Mr. New Politics, or Mr. Maverick?
As an aside, I’ll just say that it’s easier to be a uniter in a state that is so heavily on your party’s side… the line between consensus and capitulation is narrow.
September 30th, 2008 at 11:31 am
Absolutely, in Texas the line is between conservative Democrats and really conservative Republicans. To give the three men a little benefit of the doubt, there may be a little of two guys don’t really have the job yet so they don’t want to be perceived as grandstanding and the other guy wants to give his replacement the chance to show what he can do. Kind of like three guys looking at each other wondering if someone else is going to jump in the river to save the drowning child. But at some point someone has to get their feet wet.
September 30th, 2008 at 5:02 pm
This whole financial crisis is the usual October surprise. They could have acted months ago. A bail out at the top isn’t going to trickle down to the bottom. There are better proposals being worked out – compromise proposals won’t please everyone. But a severe credit crunch and possible domino effect means something has to be done.
shcb, I thought you might enjoy reading how your new fox-meme that ‘blacks and hispanics caused this’ doesn’t hold water (or not very much)
http://www.huffingtonpost.com/hale-stewart/memo-to-republicans-cra-h_b_127599.html
ps – markets do better under D presidents (by a wide margin)
September 30th, 2008 at 7:31 pm
Enky,
What I would suggest you do is go back and read what I said in that thread, it’s over a hundred posts now so take everything I said and paste it together without everyone else’s comments. See how close I am to Sewell’s analysis and see how with just a few tweaks it fits the Huffington piece. They are just ignoring a few key parts and downplaying some others.
September 30th, 2008 at 11:59 pm
shcb,
I know Enk won’t believe you even if he take the time to do the analysis, but take heart friend as I believe you (I also believe people in American and other friendly countries’ espionage agencies played a major role in making Tuesday September 11, 2001 a lousy day for many people.)
Enk,
Thanks for re-inforcing the fact that markets do far better under D presidents. In return, I paste you this:
from w3 . michaelmoore.com/words/message/index.php?id=236
October 1st, 2008 at 12:45 am
Back to the topic, this is good analysis:
http://www.time.com/time/business/article/0%2C8599%2C1845209%2C00.html
October 1st, 2008 at 5:29 am
There was a 300 billion dollar bill passes a couple months ago to help individuals in mortgage trouble so the first part of this article has already been done, no need to do it again in this bill. There is some truth and some non truth to the rest of the article. For the most part it is simplistic and not very helpful. But hey, when you allow someone to speak you take the chance someone will listen.
It is good to know I have the wacko crazies on my side Knarly :-)
October 6th, 2008 at 4:25 pm
“simplistic and not very helpful” ???
Your saying so does not make it so, in fact you are wrong so often here the opporiste is more true.
Given that the bail-out package passed on Friday and yet this Monday the DOW closed below 9000 for the first time in 4 years, it seems there is ample evidence that it was the bailout package that was simplistic and not very helpful, rather than the article.
Had your leaders heeded the advice given in the article (see the link in my Oct 1 12:45 am post above) the markets would have responded much differently. On re-reading the article, it makes more sense than ever.
Certainly the situation could not have been any worse than what has transpired after this recent $850 Billion Paulson / Bush McCain / Obama bailout package of Wallstreet losers.